UNITIL Corporation (UTL)

Unitil Corp.'s liquidity ratios have displayed a downward trend over the past five years. The current ratio, which measures the company's ability to cover short-term obligations with current assets, has decreased from 1.02 in 2020 to 0.64 in 2023. This indicates a decline in the company's short-term liquidity position.

Similarly, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has also shown a decline from 0.96 in 2020 to 0.57 in 2023. This suggests that Unitil Corp. may face challenges in meeting its short-term obligations without relying on inventory.

The cash ratio, which is the most conservative liquidity ratio as it only considers cash and cash equivalents, has also decreased from 0.37 in 2020 to 0.27 in 2023. This indicates that the company's ability to cover immediate liabilities with cash on hand has weakened over the years.

Overall, the declining trend in Unitil Corp.'s liquidity ratios may raise concerns about its short-term financial health and ability to meet upcoming obligations without facing liquidity constraints. Investors and stakeholders may want to closely monitor these ratios to assess the company's ability to navigate potential liquidity challenges in the future.

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Additional liquidity measure

The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A shorter cash conversion cycle indicates that the company is efficient in managing its working capital.

Looking at the data for Unitil Corp. over the past five years, we can observe fluctuations in the cash conversion cycle. In 2023, the company had a cash conversion cycle of 14.70 days, which was significantly higher compared to the previous year (0.48 days). This increase suggests that Unitil Corp. took longer to convert its investments into cash during the most recent period.

In 2022, the company had a very low cash conversion cycle of 0.48 days, indicating that Unitil Corp. was highly efficient in managing its working capital during that year. However, in 2021 and 2019, the company had longer cash conversion cycles of 3.60 days and 15.54 days, respectively, indicating potential challenges in working capital management during those periods.

The highest cash conversion cycle was recorded in 2020, at 26.88 days, suggesting that Unitil Corp. faced difficulties in converting its investments into cash during that year.

Overall, Unitil Corp. should aim to maintain a lower and more stable cash conversion cycle to demonstrate effective working capital management and improve its liquidity position.